An economic report issued Tuesday by Saudi Jadwa Investment shows that Saudi Arabia’s fiscal reserves fell to a four-year low of $611.9 billion in 2015, down from $732 billion in 2014 and the lowest level since 2011.
Jadwa also predicts this downward trend will continue after watching oil prices plummet by three-quarters since the middle of 2014, and it expects Saudi’s fiscal reserves to be around $500 billion by the end of 2016.
Because of the steep decline of oil revenue by 60% last year to $118 billion, the budget deficit for the country was a record setting $98 billion, and despite a government projection of an $87 billion deficit in 2016, Jadwa predicts that the shortage will more than likely be over $107 billion at the end of this year, AFP reported.
However, the country is taking measures to aid the financing of the shortfall. Bonds worth $30 billion have been issued to the domestic market. In December 2015, fuel prices were raised by 80%. The prices of electric, water, natural gas and other utilities were also raised.
As a result, Jadwa forecasts a 1.7% increase in inflation, from 2.2% last year to 3.9% at this year’s end.
Though the country’s gross domestic product rose 3.4% last year, Saudi Arabia also hopes to slow the downward spiral of its GDP which is expected to be only 1.2% this year, the lowest in seven years.
Many of the country’s officials and businessmen are now working together to find alternatives to saving the country’s economy, including the development of new businesses and creating more opportunities for non-governmental sectors.
